Sterling fell by 0.7% against the stronger single currency to drop back below the €1.18/£1 level. Against the US dollar, sterling finished the day hovering around the $1.56/£1 level after earlier hitting a low of $1.5514/£1 against the US currency. Earlier in the day, figures showed that UK construction sector activity unexpectedly picked up in November, but stayed near to an eight month low meaning that the figures are unlikely to provide much of a boost to economic growth this quarter.

In the Euro zone, the bond markets settled yesterday after the European Central Bank stepped in to buy Irish and Portuguese bonds on the open market. This helped the countries, as this pushed yields down and therefore also pushed down the amount of interest that the respective governments would need to pay on the debt. Tuesday saw this figure spike to record highs for some countries, so the intervention of the central bank has helped calm the panic somewhat. In the ECB press conference, the central bank slowed the rate at which it will withdraw emergency funding.

In the USA, the US dollar fell against the stronger euro following a volatile day on the currency markets. The US dollar fell by around 0.7% against the single currency following the ECB's purchase of European bonds. News that the US unemployment claims rose by 26,000 this week did not help the US dollar either. Ahead of today's key Non-Farm Payroll figures (released at 1.30pm) this is not the news that many wanted to hear and demonstrates the continued fragility of the US economy.

Elsewhere, the South African rand strengthened by 2.2% against sterling yesterday after strong earnings forecasts from one of the country's leading petrochemical manufacturers saw investors buy into the currency. It takes the notoriously volatile currency to ZAR10.71/£1 so if you have any rand requirements, now is the time to act to stop it dropping any further.

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